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Expat, previously, and in general,
the ATM leverages a shelf registration. The shelf registration authorizes a certain amount in DOLLARS, not it share volume. The only thing constraining the volume is the share authorization limit, which is something like 150mm or so. As memory serves (and really I don't pay much attention) the latest shelf was something like $30m, so there is a good bit of real estate left. Some has been gobbled by recent placements and presumably an offset for the warrants as well (figure something like $5m) and recent guessed ATM activity for maybe another few million (round it to 5 for the fun of it) and figure there is some $20m worth of shares left.
BICBW
volume keeps rumbling along with a rather static SP. There seems to be no debate that the ATM is the supply. Historically it seemed voids would pick up the slack of ATM use, it would be coupled with some PRs and increased nod and wink communication from the presidents desk.
This is different. The PR was pretty thin, the executives office is silent, and at least judging from what folks post, voids are tapped out (or at least no longer admitting to backing up the truck).
If it is true that the ATM has been able to dump these millions of shares then it is a true measurable condemnation of SKS and his credibility and the credibility of Wave under his watch. Its been a very long time since SKS has been able to move this level of shares without a deep discount and a matching suitcase of warrants.
Certainly the latest placement enjoyed a modest discount, and some out of the money warrants, but it seems that was the payroll component and the ATM continues to print away into what seems to be durable demand.
It is a bit on the bullish side of the ledger that this is happening. Its still dilution, and apparently a lot of it, but that inevitability was a given.
tkc, I'm just looking at the crude numbers ...
the PP was some 1.25mm shares, the volume on the week some 5.5m shares, plus some above average volume - call it a million shares - around santa time. there is the whole bit about NAZ double counting, or not, and so on, but it seems no matter what at least 1 or 2 million shares were added (ATM), largely in the net absence of SP change. Somebody is holding an extra 2 million shares and I am inclined to think the voids are tapped out, and I personally would not consider putting money on this table at this time. So the question still begs, who bought - who absorbed all that ATM and perhaps PP selling? Historically I have assigned a lot of this to voids buying and selling from voids, but I don't see it these days, too much fatigue. If it was just the meandering traders, then they got snookered. TO the extent that any snookering went on, I credit Feeney, not anybody else. Feeney was getting slapped around by SKS nonsense as much as the next person IMO. I'll wait for the annual and see if WAVX is heading towards speculative investment stuff or not.
It is all pretty much mindless musing in any event. NW seems to indicate that deliberate capitalization was indeed going on.
tkc, FWIW it is a pattern that Feeney has a considerable record of success with, in the past the PPers made a quick flip for a decent little profit and left the table with a pocket full of warrants. Consequently, Wave never suffered in finding PPers. THEN a couple of PPs didn't pan out that way, I suspect it became nearly impossible to line up PPers, and SKS got fired. Seems they managed to pull this one but it does still beg the question of who bought a few million shares as I find it hard to believe voids have that kind of coin/interest left.
gucci, I'm inclined to think that given the awful circumstance Wave was/is in, and given that Solms got the job in October (during Q4 i.e.) and that Q4 has not yet reported etc etc, ... that a period of quite is most sensible. If Wave was solid, had a decent balance sheet, a regular supply of new and old customers and so on then one can imagine a more high profile play-by-play blow-by-blow accounting of the shake-up that must be going on. But that is not the case. He took over a demoralized, fractured, ineffective company loaded with nepotism, pet projects and replaced a weird CEO with a weird relationship with a weird shareholder cult. Employees are leaving or being fired and otherwise being evaluated, it is not time to read about anything anywhere else. The annual report will provide the opportunity for management to update shareholders on the shake-up, cash-flow, and business development (or abandonment). Anything else would just be pieces of info that would generate more questions and chaos than it would answer. Shareholders were told in early November he was going to survey the company and its products item by item, person by person, and make decisions. I expect the Q4/Annual report and the accompanying CC would be the time that a sober manager would provide a synopsis and whatever guidance they can.
barge, the circumstances for SKS' removal are part of the public record.
Look at the SEC filings. The dude had run out. Pump and placement wasn't working anymore. The last couple of placements are underwater. That is a first, and THOSE shareholders are a little less inclined spend their days in such a circumstance in genius worship and more inclined to let the BoD (their representatives) know how they feel and what the likelihood is of their future participation in equity financing is.
One can revel in genius and tout pipelines for a long time, but eventually (and notably when PPs stop making money for participants) the endless well of equity financing goes dry.
At such a point the board must act, they can't even pay themselves in such a circumstance. Whether Berger moonlighting with Veil or Lee moonlighting with Evo5 contributed is anybody's guess.
Nothing could be more plain. They were out of money AND out of credibility AND out of kool-aid. So, they moved to fix 2 (credibility) which perhaps may result in making some of 3 (kool-aid) and through fiscal/corporate management perhaps some of 1 (money). but at the juncture Wave was at it was impossible to not fire SKS. The choice was to fire or to fire.
Again, read the SEC filings.
alea, I'm pretty sure I made some pretty
insane Xpress valuations back in the fever. I can't see hinme taking just an ownership interest in lieu of the parachute. Some sort of fixed term stipend might do the trick. $50k/month for a year, spend it how he/they see fit.
expat,alea - the Sarnoff role,
in the Xpress debacle Sarnoff got a piece, a worthless piece, but it was not a cash pit for them. In the scenario described Wave gets a piece (they did pay for whatever it is after all). Had Xpress done well, Sarnoff would have done well. If scrambls does well, Wave does well. But it is up to scrambls to fund and run scrambls.
Obviously, this can't happen. Nobody at scrambls is accustomed to life without fat salaries, playful disregard for expenses, and cleaver advertising gimmicks.
What is a barebones salary for these folks? Lets say there is 4 of them ... 600k/yr total after expenses? One could see an arrangement where Wave agrees to the 51/49 split AND Wave sends them a check for $50k/month for 1 year. Only some sort of starter salary package like this will get the scrambled to bite.
trust, I never said anything about giving anything away,
I was talking about letting SKS buy 51% of scrambls from wave for $1+milion, currently valuing the scrambls property in excess of $2m of which Wave maintains ownership of a hair short of half.
Alternatively, Wave sells a million shares of WAVX Common Class A to generate the cash to give SKS the money they owe him (about 3% of Wave in dilution terms).
So, 51% of scrambls or 3% of Wave.
hah - that was exactly what I was thinking -
Full control (51%) with reasonable compensation to Wave for considerable seed capital already invested should the thingy fly.
If its so cool and all, and there are so many customers and enterprise folks in negotiations and so on, then it is certainly the billions they imagine, they will be able to dilute Wave some as they seek funding, and will learn personally (perhaps slowly) the underlying reality of dilution to current shareholders.
I'm inclined to think the clan would migrate towards a model of careful cost control, equity based compensation in lieu of large cash eating salaries and deliberate, if even incremental, monetizing of assets.
A little course in Business Development 101 so to speak.
Perhaps then an integration of exuberance, opportunity, risks and reality will find its way into the genius mindset - in a heaving world sort of way.
tkc, from my perspective the seeds for the hole were planted before SFND or Samsung. Expenses were ramping at an alarming rate, they simply required a new big deal in the near future, and Wave's track record was these things took quarters longer than SKS would seem to think or imply ... hence an inevitable hole. SFND simply exacerbated things. 2011 expenses came in 60% greater than 2010, SFND and Samsung can only explain some of that. The chickens came home to roost beginning Q1 12. No new big deals, erosion of Dell royalties, no serious effort to manage the additional expenses brought on by SFND, and a fearless willingness to continue a high burn rate. 2012 was a year of catastrophic unwillingness to observe what is, to instead cling blindly to what one wants to be. About the time I expected a PP (still later than good forecasting would have done, but nearly to the date, they rolled out the ATM. Denial is what that was. I dumped a lot of shares heading into the Q1 report. Woohoo. I could deal with a hole, but not a cliff, and particularly one management durably refused to see. It definitely remains to be seen if they can migrate away from equity financing, there is currently no good basis to formulate a position that the end of equity financing is in sight. Should that day occur speculators will likely take renewed interest in WAVX.
Based on recent filings the default condition
of the ATM is "on".
What would be notable would be evolution towards a condition where the default condition for the ATM is "off".
As such, anybody who has an interest in going long WAVX can do so without much in the way of concern for shareprice movement as a consequence of their interest.
I'll pencil in May 11, 2014 for the next glimpse into the equity circumstance at Wave.
Oh c'mon,
what's wrong with calling for a few rounds of "back up the truck", heaving worlds be damned.
Nasdaq: WAVX Common Class A
mkt cap listing floor,
it is important to remember that much of the sell side appears to have been from the ATM hence mktcap calculations going forward should include a growing #shsout factor allowing for continuous price erosion (to $1) as long as it is in step with ATM printing. At the rate the ATM was printing, $35m shares outstanding and $1 a share could as easily as not end up occurring more or less at the same time. In other words the SP to meet Mcap requirements was over $1 only because there was/is fewer than 35m shares out. I suspect that the days of <35m shares out are numbered, in which case the mcap rule evaporates and it becomes once again a SP rule, and that CAN be RSed out of.
alea, what can I say,
I actually went long a bit on 10/25, a couple months ago that would have been awfully difficult to imagine. I thought a few things listening to the CC stream were striking:
1. all the thoroughly discussed things about message, accountability and focus.
2. he needed to make key strategic hires to clean up the product
3. Larry called and gave an SKS praise intro as a lead-in to a Q that was an obvious entry point to tip a hat to SKS and it was met with absolute silence
4. He never even pretended that he is in employed in some sort of "acting" capacity.
5. for the most part he seems hands off with Souren (and from your numbers Souren was showing some results).
6. He basically took GF's back, something to the effect of 'how can a CFO do their job when they are being fed a river of fluff garbage for projections'
Of course, my thinking is they likely can only eat so many parachutes in a day even if they were so inclined.
I'm looking forwards to the thoughts of those more able than I about the nitty in the 10-Q.
**weby, you asked:
1. Why haven't we sold some more deals by pure dumb luck if the product fills the real need?
2. Why, after 20 years and a fully developed product line, has the street continued to indicate the company is a sell?
3. Why do we no longer hear about Wave being Needed/Required to manage turned on TPMs?
Q1.
Allow me to use a metaphor of a highly creative and talented writer/author. The writer comes up with amazing ideas, characters and plot, and writes many chapters. At some point before finishing (let’s say 85%) the story is completely finished in the writers mind. The characters are fully developed, the plot fully realized, the ending completely decided. The project now goes from fun and exhilarating to tedious and boring. The last 15% holds nothing in a personal sense, but it is where all of the monetizing happens, it happens actually with the last 2 words “The End”.
There are amazing and creative people in trusted computing, and it seems some work tirelessly creating things. Once the thing is more or less worked out, they move on (to scrambls e.g.) as the actual last 15% effort to monetize is boring and tedious.
In this particular case (SKS) it shows in everything. I’ve seen slide shows and presentations that many think are wonderful, never mind 6 typos/grammatical errors PER SLIDE!! Perfectly happy with the fun part, the ideas thing, not so interested in the boring tedious part – proven clear communication. The ideas were fun, the product (the presentation) routinely looked absolutely amateur.
There are many indications Wave’s products themselves are clunky just as the presentations are. Solms more or less flat out said he is going to hire a couple of top-flight engineers to clean up Wave’s products (these “fully developed” product lines). This coupled with a rewards/compensation strategy that clearly encourages folks to throw in the towel if they don’t think they can close by the end of the Q (which would move to the next Q and so on).
Finally there is a fundamental change in belief. SKS believed the customer was generally ignorant and needed educating. Solms believes Wave’s sales force has been generally ignorant and in need of educating. The two are opposites in their estimation of who “gets it” with the latter erring towards the notion that the customer is always right.
This characteristic of SKS is great in the lab, awful in a leadership position. Attention goes to those with something cool, not those doing the boring hard work of monetizing. Those struggling with resources in their effort to monetize see new projects popping up like weeds while they still work in the shadows trying to close the first project. Moral fades. The treasury goes bust. Pink slips print as fast as shares. This is not a machine that closes deals, even by just "dumb luck".
The machine is broken.
Q2 ... the street is the street, and Wave's cash flow and treasury look awful
Q3. Because it isn't true, it is dated fluff. ncbaker reported e.g. his 18,000 seat employer electing to use Credant to activate and manage TPMs at their company.
some aspects of the model are the same,
certainly the stated methods in execution differ wildly. Telling people they are ignorant, in need of education, and then hitting them with a garage-door metaphor is apparently being discarded as a means to tap demand. Listening to identify demand, tailoring message to clearly relay how the demand is met, and then doing so seems to be the order of the day.
SKS thought his model was to run at CFBE, and take anything over that and pump it into "growth". SKS lacked focus on this matter, and after a couple of success (GM, BASF) seemed to adhere to this tree branch to tree branch notion that simply was not working. In the end it is likely that it just wasn't that important to him (dilution), he valued his dreams more than dilution.
Solms has stated clearly: dilution is a "black mark", an embarrasment, it must end. He did indicate however that he is not hell bent on demonstrating nearer terms profits, that income above CFBE will be used for "growth". Its the build a business approach as opposed to asteroid approach.
On a separate note there is some talk going on about who was right or wrong and when. I would suggest that folks focus on process ... not positions. Does one employ a critical process that more rapidly reaches a truth, or do they employ a non-critical process that subordinates the truth with hope? The lesson is not in being correct of incorrect, the lesson is in improving the process.
ATM error,
I said Q3 in my ATM post, I meant Q4 (Oct early Nov).
RoT, 2 more Qs of that and you have CFBE, and if they run it off the ATM one is looking at around 3m shares (at current trading range) to get there.
That would be the other side of the doughnut hole, fancy that.
I don't want to go back and add up how many shares it took to bridge the hole, but that share bridge and the word 'genius' do not belong in the same novel.
*ATM back of the napkin,
if one assumes double counting of shares on NAZ reported volume as is commonly cited, then during Q3 the ATM accounted for more than 40% of the sell side or trading. Wow.
it seems Wave either cannot find investors, or cannot find them at the right price.
the upside is small investors can participate in dilution done this way, there are no attached warrants, and it seems cash-flow has improved to the point where this approach can go farther hat it could have ever pretended to historically.
looking at cash-flow in the crudest way, Wave burns about $700k/month, at the current ATM flow-rate they b.e.
obviously there is the whole parachute thing ....
I'm expecting a SP rally, folks seem giddy, but they wont be buying from nervous nellies, they'll be buying from wave.
RoT, I too am no accountant,
but I believe deferring revs w/re to maintenance vs initial license are separate matters. The notion of asking for a refund may play a role with the initial license (or some such notion) but in the case of the initial license the work has been performed and fully expensed. Hence after adequate business in that area the company can record all the payment as revs on receipt (which Wave does for smaller customers).
With maintenance the work has not yet been performed, has not been expensed, the expected maintenance updates have not been delivered. That,I would expect, is always deferred otherwise it gives an incorrect impression of profitability (recording revenue without corresponding expenses that WILL BE incurred).
I imagine enterprise customers may well be often going with three yr contracts e.g, but suspect that smaller customers just pay year to year. It is likely an option. And all of that is buried far from view.
barge, do you mean this part of Dell?
" It was discussed earlier that the comlany I work for has 18, 000 employees, recently upgraded to 100% windows 7 and they have turned on the TPMs, hut they are using Credance Software. I alway assuned that when our company turned on its TPMs Wave software would manage them."
ahhhh, so the NSA perhaps planted the notion of back-doors and NSA privilege in order to destroy TCG/TC .... the biggest threat to their current access at will.
vader, I expect them to be reasonably mum about Exo5,
*if* SKS was fired over Exo5, it would be at odds with NWs perspective.
I am no lawyer, but form 8-k is used to report material events outside the course of normal business, and I question whether Wave's 8-k cleared the hurdle for timely disclosure as the unnamed bit was an insider, and the insider nature of this didn't come out until the S-3. It would seem to me full timely disclosure should have named Rich Lee and Exo5, I'm not qualified to parse should from shall.
Folks have been sued over less, in which case it would be in Wave's interests to let this pass (if it is indeed as ugly as one could conjure).
They effectively just seeded over 1% of the company to an employee for software and chose to report it in a rather obscure and bumbling manner. Very very odd, is the notion that the S-3 registration would go unnoticed? as the S-3 needed to mention Exo5, did they think it would just slip by? What was the value in excluding Exo5 from the 8-k? It strikes me all as very very dumb (vvd = genius? ... nah).
alea, it wasn't my doughnut hole, I just branded it. Pretty much everybody saw the fiscal dilemma, and just varied to the degree with which they assumed Wave had a plan versus Wave hoping+praying ... and it appears it was the latter.
Consequently, I was wrong. It was not a fiscal doughnut hole (there was no other side), it was a fiscal cliff.
In SKS' mind, quit clearly at this point, there was a plan and the other side of the doughnut hole was lost in a flood ... a Thai flood. That is where he scapegoats his fiscal mismanagement, the failure to capitalize, an inappropriate demand-less buildup and so on. The dude durably looks outside himself to define and understand failure. He is unwilling to be adequately critical of himself. He blew it bad.
vader, the unnamed is named,
it is a company (Exo5) founded and run by a Wave employee named Rich Lee. The company was founded *before* Rich Lee was hired by Wave, he is the cloud project manager for Wave and the CEO of the company Wave gave the shares to in exchange software (although it is unclear to me who owns that software as Exo5 is still out there selling software to others).
got it, the cherry picking notion seemed out of the blue to me in the context of your normal discussion of the numbers. If it just pertains to a posturing statement on linkdin or wherever then I see your point ... although one could still imagine a 'I increased non-legacy sales in USNA' which might be a bit more confusing but also more accurate (supposedly).
i'm with NW on not making a lot out of Q3 numbers re:USNA sales, his tenure seems rather brief, but I wold certainly not ignore the numbers either. I could imagine the BoD making a choice based on both process and results. If there is significant amendment to process, and even just a small indication that process modification has lead to results (but not necessarily discernible in Q3 numbers) then I could see making the change and believe it was done with material evidence to support it.
i think something shook the boat, that qualified investors have completely walked away and cited SKS, or that pipeline customers grumbled about SKS and it worked its lazy way to the BoD, or that those that worked under BS somehow made it known they would be happy to see SKS walk. NW offers a more sum-of-events argument, shareholder pressure on the BoD etc, but I do not buy that if sales are indeed ticking up. If sales are indeed ticking up the BoD would weather the shareholder grumbling ... it must be something else. I don't know what to think of Evo5.
alea, i don't see how discounting or stripping legacy numbers constitutes cherry picking. If one takes the premise that Wave sales lack breadth and that the primary revenue source is dwindling and if one imposes a goal of increasing breadth of sales as a remedy (perhaps a sustainable remedy) then it seems one needs to look at the numbers that are germane to that model and strip out legacy. As legacy numbers essentially report as USNA numbers, measurements of sales and sales trends are more contaminated by legacy numbers in USNA vs EMEA. Whether it is cherry picking or not, it seems it is incumbent on any evaluator to remove legacy/dell numbers in determining whether Solms can/has/will sell things in the USNA.
From an investing perspective WAVX is at a curious crossroads. While it has been excruciatingly obvious (at least to some of us) to get out for over a year now (and yes there have been other obviousnesses), the adventurous might now consider going long.
1. There is the glimmer of some broad demand, best articulated by alea’s numerology.
2. The beheading happened, it simply had too, it did, and the rumor mill suggests it was well received.
3. A pending Q report which might validate the glimmer in 1 above.
4. All that other stuff, mostly supply, posted elsewhere
… saving the planet, 3-4 hundred billion DoD seats etc.
A sensible person might wait for the Q report, and honestly, can WAVX really bounce on anything right now? In other words, can one “miss out” by just waiting for more information to be released in a few weeks?
The usually misplaced notion of “missing out” is what has kept this company alive, the fear of missing out coupled with NewBigDeal fantasies make for “buying opportunities” that have kept the share presses well lubed. Being a Wavoid of sorts myself, but having been fully divested before, I have indeed learned that the sun still rises even … gasp … without me owning a single share of WAVX . There are billions like me that see the sun rise every day sans WAVX, no kidding.
But if there is demand, and if the corner office has found sane leadership, well the gosh darn it I want in early. Too much time has been invested to watch the train leave the station with me missing out on the first few dozen forwards splits. Realistically there is this:
1. Q3 will likely see a stiff one time charge (the parachute) that will make the numbers look bad to the broader public.
2. There are still obstacles. Big obstacles.
3. It seems recapitalization is inevitable. I could be mistaken, I would love to have a fly on the wall, I mean SKS>Solms looks like a savings of about S400k in cash flow right there. Feeney, Michael … what are the cash compensations of Green, Berger, Thibadeau etc? … a migration towards stock and away from cash across the board could do wonders for cash-flow (I think even rwk might agree with this). Scrambls is likely coming in at around $200k a month, SKS said $100k/mo a couple years ago. I have no idea if scrambls is valuable, if there is demand for it or anything. All things scrambls have been from SKS partially echoed by a ‘you don’t get it’ sentiment from awk towards scrambls naysayers – scrambls is just a mystery, but I am inclined to think Solms thinks there is plenty n the plate without it. But back to the point, recapitalization with Wave is generally more gentle to those who invest After such events.
Dear me. What is a poor boy to do?
alea, on the cfo
as he too has a parachute, I'm inclined to think they can only eat so many parachutes in a month. Presumably his familiarity with internal numbers will keep him around for a qtr.
NW, on this:
"Gone is a lack of management discipline and focus. Employee morale is high and there is positive support for new management, but Wave is moving beyond the days of lax oversight and comfortable comp plans with little to no performance accountability. Management is now firmly focused on defining a strategy that will most efficiently utilize Wave's core assets in technology and people."
As memory serves Solms is serving at $200k a year plus sales based incentives .... versus, whatever it was, $400+200k guaranteed plus an ambiguous straw poll for more. I would resent working for the latter when looked at through a broad lens. Culture starts at the top. I have been lamenting my guesstimate of morale for some time, hopefully a top down cleaning up of pay for performance will serve to invigorate matters.
Elsewhere there was a comment on SKS arrogance perhaps losing sales, another point I have cringed about a number of times. He, unfortunately, exudes arrogance.
One must identify what customers want, inform them how you have what they want, and provide the product. Stumbling off into eddies about folks not getting it, overselling, and so on seems like it has likely been the case just based on listening to any random 45 secs of SKS communication. Wave is a servant. Act like it. They have been led for a long time with a leader of "the customer is always wrong" splinter of thought. It is not how one does things. Customers welcome experts, be an expert, a servant-expert. I think that is part of why SKS has always made me nauseous. He doesn't get it, all while proclaiming the world doesn't.
player, the rules for a *not*-in-the-course-of-normal-business material event are timely reporting, more or less described as 4 days. They canned him on the 6th and cranked out an 8k in 48hrs. I'm not sure what is noteworthy about the two time stamps.
zen, nice post.
were I to build an ark, I would be sure to put 2 bean counters in it.
echo chambers are dangerous places, even if the echoing content has value. in the end it does come down to what one decides to place the most weight on .... e.g. the rather obvious potential peril of a doughnut hole versus the rather obvious aspiration/expectations of Wave management as evidenced by the massive growth in SGA.
While long ago the notion of sales breadth was tossed under the bus the flaw in swinging from BigNewDeal branch to BigNewDeal branch has fully manifest itself ... and some conversion to valuing breadth has come about, and even some evidence that such growth in bredth *may* be under way. I thought I saw it once before, but when it is all said and done it was more about the timing of OEM reporting.
as you can tell, this is a point I really really want to holler out "I told you(plural) so" on ...
bring on Q3 numbers and hear what the new guy has to say, and for heavens sakes what is up with Exo5?
how about a parachute made of WAVX shares,
it really is what we are talking about anyway,
it just cuts out the middle man.
the fact is he (relatively speaking) needs the cash, he's been living on large cash-flow for a long time, and that drops to what ... 50k? He's been pulling $3/4m in can't likely can't make ends meet on 10% of that.
He was fired. He will get his cash. He doesn't likely see it as caring for the company or not, he likely has large bills and sub-100k just aint't gonna cover it.
Very curious to see what happens with scrambls, Michael, Kevin, Feeney, esign (no more fog-speak about esign, what does it cost, what does it make), SKS Form4, etc.
alea may be correct about the notion of a major funding effort (if the salesman can sell it). a buy-in? a preferred offering? or just a big fat PIPE? If Q3 numbers come in strong, if the can stabilze CF (perhaps all the way through to the annual report and really show some CFBE), then one can see a significant placement.
D&O, I don't think my sentiment towards SKS has changed much over a very long time.
1. He is fundamentally flawed in his ability to successfully merge Enthusiasm, Opportunity, Resources and Reality. I strived to build the acronym ERROR out of it but could never pull it off.
2. The whole nepotism and compensation strategy for a development company if fundamentally flawed.
3. His presentations, oral and written, are positively nauseating.
on the flip side,
He's had the vision thing (a vision shared by many) but notably the perseverance (and resources) to doggedly pursue that vision against big odds.
The company exixts because of him and a few other things:
(in reverse chronological order)
1. Large enterpriose sales
2. Dell bundling
3. A rabid cultish shareholder following
4. The dot-com bubble and cashing in to the tune of $120m
He is called a genius, he has something to do with 1 and 2. But 3? I think it was Peter that started that (and a wandering tribe who had their bums kicked on their last lottery ticket QDEK) and 4?? Do we really credit SKS with the dot-com bubble and the easy money it gave from Bain?
A genius would have seen there was next to no demand, horded cash (thanked their lucky stars for a treasury with 120m in it) struggled along with TCG etc, eventually nailed Dell, eventually gotten some large customers, and be sitting where they are now with perhaps NO DILUTION since the Bain PP. They would have been paying themselves modestly in cash but richly in shares such that they would have a rather large stake. They would have kept a keen eye on demand and would be licking their chops right now, owning some 20%? of a company lean mean and focused.
tkc, as it seems to be in evidence, at least from the whisper wire, that SKS was canned (not resigned as e.g. rwk states) then it seems inescapable to me that 1. he will demand his severance and 2. it will require dilution. Sure, asteroids strike and Wave sales may have leaped enough to cover the parachute, but IMO if sales had leaped that much the CEO probably would not have been fired. Unless he was fired 'with cause', which it would seem could only relate to the Exo5 thingy, and I doubt it could defensibly be argued to reach that level and I doubt the company would like to air such laundry at this time.
It seems retail Wavoids have been buying stock ... odd, to buy upon the firing of an irreplaceable "genius", but the price direction combined with thin volume indicates Wavoid buying, perhaps just from the ATM, a last offering of praise and adoration to pay for the genius' parachute.
Obviously the company needed focus, it seems there is a consensus in the peanut gallery that Solms will bring that. In the last presentation by SKS he basically said that the coolest most important thing (besides the development of the garage door opener) was scrambls ... giving every impression of a babbling lunatic to me.
The Q3 report is not too far away, it should settle some questions and hopefully illuminate Exo5. Certainly one would hope that Solms is asked about Exo5 and clarify who Rich Lee works for. Similarly perhaps Solms will delve into the area of segment reporting of income and expenses (a little light on scrambls please, seeing that it is the coolest most important thing).
The size of the pile of historical dung to crawl out of if he even pretends to shore of communication and transparency is staggering. The genius has been spouting about $50m in replacement garage door openers stuck in Thailand for so long, chortling about imminent million dollar scrambles deals for over a year and pipelines pipelines pipelines .... its difficult to see where Solms would begin in a CC.
imagine:
Q. what about scrambles revs?
A. scrambles is a experimental project, we receive no revenue from it and expect none in the currently foreseable future
Q. how much does this experiment cost?
A. in Q3 scrambls cost $1.1m, we expect to ramp that cost down approx 85% during Q4 as the development work has largely been performed.
Q. what about pipelines?
A. we are not in the oil business. NA sales of Embassy products in Q3 was $ABCm, we expect that to increase 10-15% in Q4. EAME sales of Embassy products in Q3 was $XYZm, we expect that to increase by 8-12% in Q4. Both of these estimates do not include the potential for large enterprise sales which are too unpredictable to forecast or depend on.
Q. what about CFBE?
A. Our estimated global sales for Q4 are $ABC+XYZm for Q4. Q3 expenses for RD and were $DFGm. SGA for NA was $HJKm and EAME was $FGHm for a total SGA of $HJKm+EAMEm. We plan to reduce RD by? SGA? and expect a deficit of ?? and anticipate equity funding to close the gap. Winning a large enterprise sale would obviously change these estimates. We are not in a position to make CF guidance beyond Q4 at this time.
Q. what about Evo5?
A. ?
do have all this correct?
1. Exo5 developed software for Wave for which it was given 1-2% of Wave (some 317k shares), the Sr Product Manager for the last 2 years and the CEO and founder of Exo5 are the same person, the person was hired by Wave while still CEO of Exo. Obviously he likely can't compete with exo5 at Wave (and vice versa) and Wave going into the cloud thingy is about as old as Mr. Lee's tenure at Wave. So, it seems Mr. Lee did indeed bring something to the table, it seems he effectively sold a piece of Exo5 to Wave, sold some cloud software Exo5 had developed to Wave ...
2. Blue filled the water-cooler with kool-aid. Careful. blue used the first person pronoun "we" in speaking of Wave.
3. NW provided a bunch of material indicating a sales man makes the best CEO. telstar concurs.
4. tampa says that if Wave was on the block then the CFO is the natural acting.
5. alea still wants demonstrated vision stuff and RD expertise in a CEO.
6. saliba not sativa found a quote of SKS seeming to clearly indicate in no uncertain terms he was canned, with a bit of Thai floods for spice. (is there a link to that content, is it the snackman whisperwire?)
Does that more or less wrap things up? I certainly appreciate seeing change at Wave, if for no other reason than that I was getting bored.
It's kinda tempting to maybe take a stake in WAVX, I mean the BoD fired SKS, and unless it was a response to the Exo5 thing, then the Exo5 thing was more or less simultaneously approved of. The Exo5 thing has been communicated in what can only be described as cloak-and-dagger style, I can see people getting fired over it if any of the potentially bad interpretations are indeed the case.
it is all so much like penny stock drama ... yeehaw WAVX
kisa, I'm not much of a funeral gawker, the moment something or somebody is no longer part of my or mine's future, I'm inclined to move on. w/ SKS there are the musings of "unlocking" value (which begs the ... oh nevermind) and there are the notions of what role and what compensation and the disposition of "the rest" all of which are part of tommorrow ... but celebration? whatever.
tkc seems comfortable a with decent sized founders hunk (although that certainly depdends on the size of VC committment) as 7% in the case of xpress caused an uproar (although no vc was in the equasion).
to me this positively reeks of Sprague grass is always greener stuff. Embassy wasn't enough so the Xpress boondoggle was they way to be Jobs or Ellison, and now its Scrambls. Focusing and succeeding on a project seems to get somewhat supplanted by the new big thing before the last thing ever really succeeds.
cool is funner than hard work with attached performance standards. for WAVX investors the obvious hope is that Solms is squeemish with neither hard work nor performance standards.
I suspect there may have been a parting of minds on scrambls. One can construct a scenario where it can sell a product or service for a profit, and for every model one can come up with my cat can assemble a million ways it could be squashed like a bug. I find it hard to believe Goog, MSn, or FB couldn't take scrambls to the woodshed if they saw value in it. The only gambit would be to build something tasty like Instagram and get eaten.
The only thing scrambls is is an encryption plugin and and a third party key server (IMHO).
What percentage of SBLS (putative scrambles Nasdaq listing) should Steven, Michael and Kevin get as Founder's Shares?
well it certainly pulls the plug on a major talking point, depending on the next moves over the next couple months we might see a Whole New Blue.
SKS' musing to Snackman about unlocking things seems to suggest Xpress part II, this time with the Scrambls thingy. Last time the compnay was created but became a cash hole for WAVX. If scrabmls was asctually properly spun off to fend for itself with its own ticker symbol and own sources of revenue (yet again something alea seemed to argue was the way to go if it was such a bright idea) then the test will be how it is formulated and sold to shareholders.
If SKS thinks he can get some vc money to come in then they will be in the situation like any other IPO where they try to give themselves as many shares as possible, investors as many shares as they must for working capital, and current WAVX shareholders as little interest as possible.
Could get messy, or not. The dude could be hallucinating.